In our Constitutional Republic, there are important and specific functions that the federal government is empowered to do. There is no conceivable way for these things to be accomplished without funding, which is why Congress was empowered to collect taxes so as to create the funds necessary to pay for the functions of government. No conservative, in good conscience, could coherently argue against these established facts.
Reality, as we see what has become of the Constitution in the early and mid 20th Century, reveals the sad erosion of Constitutional restraints on the Congressional power to seize the property and livelihood of the People. The leftist argument was and remains that these changes, in particular the taxation of personal incomes and livelihood, are necessary because of the necessity of “fairness“. As have been dealt with in previous articles, this fairness doctrine is not only impossible to define, it fails to even be fair.
Even if a quantitatively equal distribution of goods and services is achieved, there is no guarantee that the distribution of goods is a qualitatively equitable distribution of goods, as many will not care for what they receive, and others will have no use for what they receive. This is why it was never the intention of the Constitution for the federal government to impart fairness, only justice. It was left to the States and the People to fill in the blanks of social equity.
The most compelling argument for this is that from 1786 until 1836, or until the last of the Founding Fathers, James Madison, succumbed to death, there was not a single penny collected in personal income tax. Not one. No direct or Capitation tax of any kind was ever passed upon the People of the United States. There can be no clearer precedent that the Constitution granted no power to the federal government to violate the rights of the People to be secure in their possessions and livelihood. The “doctrine of fairness” would be so alien and so offensive to the Founding Fathers, that James Madison clearly and forcefully spoke out against such pretenses to justify any act or power of the federal government to pay for “objects of benevolence” using “the money of their constituents”.
How far have we come in this regard that even those who consider themselves conservatives (and even I have been guilty of this when younger) should have heated and impassioned discussions on the justification of tax rates between 20% and 30% on the personal incomes of citizens of these United States of America, when our Founding Fathers went to war against the Crown of England largely because of what amounted to a three penny tax on a barrel of tea (www.ushistory.org). The precedent of the Founding Fathers is clear. The correct and proper tax rate that should be imposed on the American citizen should be 0%, so the only question for conservatives is how do we get back in line with the intent of the Framers?
“…the money of their constituents”
There are two sides to the problem. The progressive policies of the New Deal and the Great Society have imposed unconstitutional obligations upon the federal government that those who have been forced to pay into those programs have a rightful expectation to receive. Conservatives must do what is right and just for the People and honor these obligations, but conservatives also have an obligation to uphold the Constitution and the protection afforded by it to future Americans, so we cannot continue doing what is clearly unjust and in violation of clear precedent of the Framers.
The ideology of socialism and the concepts of communal ownership and economic theory were common and well known in the 18th Century. Socialism had been tried, both in the old and the new world, with absolutely dismal results. While the philosophical intentions of the ideology were unarguably well intentioned, there was no point in attempting to allow failed economic principles to infect the Constitution. This is why the Framers excluded a known failed ideology from the Constitution, and instead embraced the proven principles of capitalist market driven economics.
When James Madison emphatically blasted proposed federal spending on “objects of benevolence”, he was well acquainted with the precepts of socialism. Over two hundred years later, if James Madison could see what those who consider them conservatives condone as federal obligations, would he even spare a single word of disappointment before returning to the silence of the grave?
“The essence of Government is power; and power, lodged as it
must be in human hands, will ever be liable to abuse.”
So how do we pay for the legitimate needs of government and settle the obligations of those who have come to depend on the financial support of Social Security and Medicare if we don’t tax incomes? It’s a reasonable question, and it’s one that, again, we can balance the precedence of tax policies as it existed when James Madison still vehemently stood against the ceaseless attempts of well meaning but misguided leftists of his era to impose abusive and tyrannical “abuses” of federal power upon the People and balanced with the realities of our technological culture.
A policy that is consistent with the policy as demonstrated by James Madison and the other Framers must be only on those economic activities that are tied to the operation of business, corporate, public and private sector. As our tax code stands now, 46% of the burden of government is imposed on the People (www.cbpp.org), compared to 0% for almost the entire first Century of our country’s existence. Shifting away from such a crude tax burden on the People must be counterbalanced with incomes from capital and financial instruments that are consistent with transactional and automatic excise taxes, so that the natural profit motivations of the market will result in a constant flow of tax revenue into government coffers. Finally, it must not prey upon charitable or otherwise nonprofit income of organizations that seek to serve the public interest. Ultimately, however, taxes are intended solely for funding the government, consistent with the Constitutional intent, and not necessarily on imposing artificial constructs of “economic justice”.
So what would be the Liberty solution to taxation? It would look a lot like this…
- Abolish all taxes on W-2 income, regardless of wherever derived. Any tax upon the People’s livelihoods is tyranny, but if congress shall no longer impose taxes on wages, salaries, tips, or any gratuity, this will open a large hole on the federal revenue structure that will have to be closed through excise taxes on business operations and expenses (see below). From a practical standpoint, it is impossible to consistently enforce a tax code on literally over one hundred million people, so this will more efficiently direct federal enforcement on a smaller population of businesses.
- Abolish all taxes on inheritances or properties or estates. If it is unjust for Congress to seize the incomes and livelihoods of the People when they are living, it is no less unjust to seize the incomes and livelihoods of the People when they are dead.
- Tax only net profits (revenue less all expenses) of business operations, consistent with the Generally Accepted Accounting Principles. When people no longer have to give their earnings to the government, that money will reappear on the balance sheets of businesses across the United States. Once a tax code is brought in line with accounting principles that companies depend upon to make sound financial decisions, the reporting of incomes to stakeholders of the business will match that which is reported to the tax collectors, which would eliminate legal tax avoidance accounting practices.
- Tax the purchase or the sale (not both) of real estate for business use, capital manufacturing equipment, financial instruments (including when they are issued as compensation), and goods that could be considered luxury or investment goods (such as jewelry, artwork, planes, automobiles, vans, trucks and boats). These excise and sales taxes replace the revenues lost from the abolished direct taxes on the People. When tax codes are made congruent with the motivations of businesses, revenues will come naturally and justly from business operations. Many of these transactions have formerly been excluded as “expenses” in accounting of business operations. These excise taxes is insured to be a new tax revenue stream.
- In order to cover prior New Deal and Great Society obligations (that must be phased out), congress shall impose a payroll tax on employers sufficient to fund those obligations until an equitable private sector solution can be initiated. This is an imperfect solution to an imperfect betrayal of the intent and precedent that the Framers clearly set for the purpose and role of the federal government. It is the responsibility of all in government to unburden the People of federal expense, so that they have the means to save for their own future. We, as conservatives, must push to reeducate the principles of frugality and saving for the people. The fundamental principle of personal responsibility must once again become the cornerstone of Americanism.
Coupled with the Currency Wage Policy, this is how we reestablish the culture of Liberty to these United States of America.
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